The Camp Hill, Pa.-based pharmacy chain reported net income of $41.4 million, or 4 cents a share, compared with a year-earlier profit of $89.7 million, or 9 cents.

While four cents a share matches the current median estimate in a Thomson Reuters poll of analysts, the consensus view earlier this month was eight cents. It was reduced in half after Rite Aid issued a profit warning on June 5.

CEO John Standley blamed the quarterly profit decline on higher-than-expected drug costs and reimbursement rates. Earlier this month, the company warned that a delay in the expected reduction in prices of generic medicines would weigh on margins.

Revenue for the three-month period nevertheless rose 2.7% to $6.5 billion from $6.3 billion a year ago last quarter, topping the Street’s view of $6.43 billion, as an overall increase in pharmacy demand helped to offset flat front-store revenue. Same-store, a key growth metric of sales at stores open longer than a year, increased 3.1%.

While it filled 2.3% more prescriptions last quarter at its more established stores, Rite Aid said pharmacy sales were impacted by the introduction of new generic drugs.

The third largest pharmacy behind Walgreen (WAG) and CVS (CVS) backed its already reduced earnings outlook of 30 cents to 40 cents and said it continues to forecast full-year sales between $26 billion and $26.5 billion.

Analysts on average are calling for in-line earnings of 35 cents on sales of $26.19 billion.